With the unexpected return of Bob Iger last month for a new term as Disney CEO, the entertainment giant’s veteran CFO Christine McCarthy has emerged as one of the leading candidates to take over.
“Christine has always been a force to be reckoned with, but you have to put her on a top five list after the last few weeks,” a Disney insider said of the now-famous chief financial officer. If McCarthy were to receive the keys to the Magic Kingdom within the next 23 months, the leader would occupy a historic position as Disney’s first female CEO, soon to be over 100 years old.
CFOs are key but mostly low-key managers working behind the scenes, emerging during earnings season and at occasional investor conferences. They rarely take center stage, especially in the heat of battle leading the troops to a disorderly ousting of their boss – and even more rarely do they become a king killer.
That’s what happened, however, with McCarthy, Disney’s longtime treasurer who became chief financial officer in 2015.
A firm hand in Iger’s old regime and when Chapek was in charge, McCarthy played an influential role in helping pull off a series of key mergers, and adept at raising and managing cash during the depth of Covid.
Yet on Nov. 20, the CFO became the public face of Disney’s coup. Distraught over the company’s disastrous results and Chapek’s missteps over the past 18 months, McCarthy is the executive whose name is now in the history books for going to the board and his President Susan Arnold to orchestrate a revolt in the executive suite that brought Iger back after less than a year of official retirement.
Traveling to Arnold in mid-November, McCarthy, one of the most senior women in the entertainment industry, threatened to quit unless Chapek was released immediately.
“In the 35 years I’ve done this, I’ve never seen a CFO bypass a CEO,” a longtime Wall Street analyst said, with a hint of astonishment in his voice weeks later. that McCarthy cut the knees under Chapek and his reign of error.
Now Iger, who handpicked Chapek at the end of 2019 before quickly taking on the former parks and resorts manager, has just under two years to choose and position a viable successor. In that vein, it’s no surprise that the CFO’s name appears in the list of the top five candidates being talked about for the future CEO job. However, with the track record of Iger’s successor in mind, this list, on which some have also placed Dana Walden, President of Disney General Entertainment Content, must be narrowed down to one name.
The reality is that there aren’t many seasoned executives in or out of the Disney pipeline who have the institutional memory, the board relationships, and the leadership chops to avoid on-the-job training and a repetition of the Chapek experiment.
Thing is, the eye-popping exit of Tom Staggs in 2016 as COO, and the subsequent departure of streaming kingpin Kevin Mayer in 2020 thinned Disney’s top ranks – before Chapek was named CEO by Iger. . Even with little talent and creative credentials, that pruning leaves McCarthy in a position of strength, a media banker recently noted. To varying degrees, the anointed Staggs and golden boy Mayer had both been seen as Iger’s successors and both left after being ignored and frozen. It’s unlikely, however, that either will be able to return to the company and take on the top job unless Disney agrees to buy out Candle Media, a lucrative business the friends and former colleagues have taken over. launched with the support of Blackstone.
Analysts and fund managers really liked Staggs, who also served as CFO for years, and are fans of the current CFO, calling McCarthy “very honest”, “very capable” and “a straight shooter”. .
“She really shone when the pandemic hit. She did exactly what the CFO was supposed to do. She lined up enough money for one to two years without income. She raised a huge amount of money very quickly at reasonable rates to protect the business,” one said.
Disney’s latest financial results, however, were shocking as the company spent and spent on streaming, with losses in the division reaching nearly $1.5 billion for the fiscal fourth quarter ending September – more than double. red ink from the previous year and much steeper than expected. Disney’s guidance for next year also looked grim. Analysts wish the company had better managed expectations, which could have avoided a rout for Disney shares.
On an earnings call with analysts after the numbers, Chapek let the shrewd McCarthy do the most talking. “She dealt with all of these issues,” said a biology major analyst and botanist who worked at banks for two decades before joining Disney in 2000. Insiders describe McCarthy, who quotes aviation pioneer Amelia Earhart as her hero, as “the kind of person who really has the company’s best interests at heart,” as well as “incredibly smart” and a great mentor to the women of Disney.
Still, with all of McCarthy’s strengths and recent major muscle flex, time may prevent him from being in the final CEO mix, a Wall Streeter suggests. McCarthy is 67 years old. “Bob Iger was originally supposed to retire about six years ago when he was 65. So I don’t see them hiring anyone [that age] to be a CEO” in the long term. “They just went through… how many transitions?” »
Whatever the final verdict on a new CEO to replace 71-year-old Iger for the second time, McCarthy seems certain to be a key player at a delicate time for Disney and the wider media landscape. “Investors are waiting for Iger’s direction on DTC investing, how he plans to generate subscribers, but not just any price. It’s a market right now that’s focused on the cost of that growth, hoping that Bob [Iger] walks in there and reviews his plans and how spending will drive future profitability.
Iger has already announced that he will restructure DMED, or Disney Media & Entertainment Distribution, an unpopular division created by Chapek that has brought the company’s creative decision makers to their knees. McCarthy, along with Walden, Alan Bergman, Jimmy Pitaro will work to design “a new structure that puts more decision-making back into the hands of our creative teams and streamlines costs.”
Which means, to quote Iger’s beloved hamiltonshe’ll be right in the center of the room where it’s happening, one way or another.